New Money Laundering Amendment Bill 2020 – key features

The Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill 2020 (the Bill), which transposes certain elements of the AMLD5 into Irish law, will:

• enhance the existing AML/CFT measures in place in Ireland;

• bring new 'designated persons' within the scope of the AML regime in Ireland;

• provide additional safeguards for transactions to and from high-risk countries;

• prohibit the creation of anonymous safety deposit-boxes by credit and financial institutions; and

• increase the focus on customer due diligence (CDD) requirements.

We have set out in more detail some of the key features of the Bill below:

1. New Designated Persons

Section 3 brings virtual asset service providers and custodian wallet providers (see article on AML and virtual currency service providers here) within the scope of the AML regime and they are now included in the definition of 'designated persons' under the Principal Act.

Section 4 brings new entities under the designated person provisions, including letting agents (€10,000 minimum monthly rent), high-value art dealers (€10,000 minimum transaction value) and tax advisors. These new designated persons will be required to apply AML measures in the course of their business.

2. Enhanced CDD

Section 5 places an obligation on a designated person to carry out CDD when required to contact a customer 'by virtue of any enactment or rule of law'.

Section 11 improves safeguards in place for financial transactions to and from high-risk third countries and provides for a detailed list of additional information that a designated person is required to request when dealing with a customer established or residing in a high-risk third country.  The EU adopted a revised list of high-risk third countries under the Commission Delegated Regulation (EU) 2020/855 which came into effect on 1 October 2020.

3. Beneficial Ownership

Section 7 provides that, where beneficial ownership regulations apply, a designated person must not enter into a business relationship with a customer until they have taken steps to gather the relevant information from the relevant beneficial ownership register.

If the business relationship is established with a financial institution, the financial institution may open an account prior to obtaining the relevant information but cannot allow any transactions on that account.

There is also an obligation on a designated person to verify the identity of a beneficial owner who is a senior managing official.

4. Politically exposed persons (PEPs)

Section 9 will empower the Minister for Justice, with the consent of the Minister for Finance, to clarify which functions in the State are considered to be 'prominent public functions'.

It also allows for the continued monitoring of someone who was previously a PEP, once a risk is still posed by that person and only until they are no longer considered a risk.

5. 'Tipping off' and reporting of breaches

Section 14 provides a defence to proceedings in relation to 'tipping-off' where the designated person can prove the information was disclosed to a specified financial institution connected to the designated person or part of the same group structure.

A new section will be added to the Principal Act requiring each competent authority to establish 'effective and reliable mechanisms' to encourage the reporting of potential and actual breaches of the Principal Act through a secure means of communication.

6. Anonymous safe-deposit boxes

Section 16 prohibits credit or financial institutions from creating anonymous safe deposit boxes.